Results for the Six Months Ended 30 June 2010

8/8/2019 Results for the Six Months Ended 30 June 2010

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Results for the sixmonths ended 30June 20106 August 2010


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Forward looking statementsThis presentation includes certain forward-looking statements with respect to the financialcondition, results of operations and business of Logica plc (Logica), and certain plans andobjectives of the Board of Directors of Logica with respect thereto. By their nature,

forward-looking statements involve risks and uncertainties because they relate to eventsand depend on circumstances that may or may not occur in the future.Forward-looking statements are not guarantees of future performance and Logica's actualresults of operations, financial condition, liquidity, prospects, growth and strategies and thedevelopment of the industry in which Logica operates may differ materially from thoseexpressed or implied by the forward-looking statements included in this presentation.

6 August 2010 Results for the six months ended 30 June 2010 No. 2

Events that may cause actual results to differ from such forward-looking statementsinclude, but are not limited to fluctuations in the capital markets; fluctuations in interestand exchange rates; increased regulation or regulatory scrutiny; the occurrence of unforeseen disasters or catastrophes; political or economic instability in their principalmarkets; adverse outcomes in litigation; general local and global economic, political,business and market conditions.

Except as required by its legal or regulatory obligations (including as required by the UKListing Authority and the London Stock Exchange), Logica does not undertake anyobligation to update or revise publicly any forward-looking statement, whether as a resultof new information, future events or otherwise


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Basis of numbers presentedUnless otherwise stated, the comparatives in this release relate to pro forma results which:

reflect average 2010 exchange rates by retranslating prior period actual numbers at average 2010exchange rates. This increased H1 2009 revenue by 10 million and had no impact on adjustedoperating profit

are adjusted to include the disposals that took place during 2009 by adjusting the actual prior periodnumbers for the relevant period owned. This decreased H1 2009 revenue by 3 million and had noimpact on adjusted operating profit

includes a number of changes to the scope of outsourcing activities in some of our geographiesWith the exception of adjusted operating margin percentages, all numbers in this release have been


.

financial statements.Adjusted operating profit and margin are from continuing operations and before exceptional items andamortisation of intangible assets initially recognised at fair value in a business combination.

Adjusted earnings per share is based on net profit attributable to ordinary shareholders, excludingdiscontinued operations, exceptional items, mark-to-market gains or losses on financial assets andfinancial liabilities designated at fair value through profit or loss, amortisation of intangible assets initiallyrecognised at fair value in a business combination and tax on those items.

Exchange rates used are as follows:

H1'10 H1'09 H2'09 FY'091 / Average 1.15 1.12 1.12 1.12End of period 1.22 1.17 1.13 1.13 / SEKAverage 11.26 12.16 11.66 11.91End of period 11.64 12.76 11.53 11.53


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Introduction - David Tyler

Trends and financials Seamus KeatingOutlook Andy Green

Agenda

No. 46 August 2010 Results for the six months ended 30 June 2010


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Whats in the

numbersSeamus Keating


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H1 results at a glance

(H1 2009 pro forma: 112%) (H1 2009 revenue: 1,883m)

Revenue decline *

(1)%

(H1 2009 pro forma 728m)

Outsourcing revenue growth

+9%114%Book to bill


Adjusted operating margin

(H1 2009: 5.5p)

Adjusted EPS

5.7p6.7%

(H1 2009 pro forma: 6.8%)

383m

(June 2009: 457m)

Net debt

* On a pro forma basis


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PS(2)%

T(8)% Return to growth in

Financial Services andIDT

Public Sector, Energy & Utilities and Telecomsdown against strongcomparatives

Growth/(decline)by sector

%

So whats changed?

H110 revenue1,871m

(1)%

FS+4%

International+1%


IDT+3%

E&U(4)% Expected

weakness inBenelux offset byimproving trendsin France andNorthern and

Central Europe

rance

+6%

UK(3)%

Benelux(15)%

N and CEurope+5%

Growth/(decline)

by

geography%Sweden+1%


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Improving trends in European commercial sector

N and CEurope

+5%

Sweden+4%

Benelux(13)%

1,281m

68 %of group revenue(excluding Public Sector)

Key points


France

+5%

UK(6)%

Intl(3)%

-

Benelux stable on H2 2009 H2 visibility improving - orders

signed in H1 include: Posten Norden (Sweden/Denmark) Lantmnnen and Scan (Sweden)

AMF (Sweden) DHL (Benelux) La Banque Postale (France) Orange (France) BT (UK)


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Public Sector revenue trends

N and CEurope

+4% Sweden

(7)%

590m

32 %of group revenue

Key points


UK(1)%

(18)%

France+14%

Intl+31%

(2)%

Strong performance in Northernand Central Europe, France andInternational on the back of recent wins

UK revenue broadly stable andincreased Q2 book to bill

Election related uncertainty inthe Benelux to lessen as wecome through 2010


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Consulting and Professional Services

UK(4)%

France(2)%

1,079m(7)%

58 %of group revenue

Key points Q2 revenue decline slowed to 5% Solid book to bill of 110%

6.8%Adjusted operating margin

(H109 pro forma 7.0%)

Benelux(17)%

Sweden(13)%


Europe(1)%

Intl(3)%

Financial Services and IDT

pickup driving demand Areas of demand around SAP,

Microsoft Azure Continuing investment in Business

Consulting Lower H1 margin due to impact of

pricing, new hiring and some wageinflation

0

100

200

300

400

500

600

Q1 Q22008 2009 2010

Revenue (m) and pro forma YoY revenue decline (%)

(12)%(5)%

(8)%(5)%


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400

450

Revenue (m) and pro forma YoY revenue growth (%)

Outsourcing revenue and margin progression

+12%

6.5%Adjusted operating margin


Key points Continuin to out erform market

+10%

+8%


250

300

350

Q1 Q2

+9%

with H1 revenue up 9% Outsourcing now 42% of Group

revenue H1 book to bill of 121% Fastest growth in Applications

Management, with orders up26% and revenue up 15% Visibility of 90% of 2010 revenue Improving efficiency to drive

marginH1 +9%


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(291)m +125m(121)m

(6)m

(30)m

(9)m(24)m

(37)m +8m (383)m

+27m

(25)m

Cash flow for the six months ended 30 June 2010


Net debt/EBITDA of 1.1x at 30 June 2010

H1 09 (438) 127 28 (62) (31) (28) (26) (18) (47) (9) 47 (457)

m


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Andy Green


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Our Journey to bebrilliant together


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We set ourselves a clear strategy



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Logica strategy

Using client and cultural intimacy to build valuable long termrelationships

Backed by a competitive global delivery mechanism

Well balanced business across sectors, geographies and clients


Continued investment in sector and technology practices

Margin improvement underpinned by continual overhead reduction,reducing average cost of labour and improving utilisation

Consistent delivery of operating profit into cash


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Key points

H1 proof points

Improving trendwith FS and IDTclients

Top 5040%(H10938%)

Clients

H110 revenue1,871m


Strong order performance Outsourcing Services growth Commercial sectors returning to

growth Continuing wins in the Public

Sector New propositions launched in H1 Solid margin performance

despite 2009 price pressure

Outsourcing42%

(H10939%)

OutsourcinggrowthoffsettingConsulting andProfessionalServicesdecline

Services


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0

1,000

2,000

3,000

4,000

5,000

6,000

32,000

35,500

39,000

42,500

Right skills in the right place

Key points Attrition increasing

N u m

b e r o

f e m p

l o y e e s 5,650

Headcount offshore and nearshore(June 2009: 5,100)


ec- un- ec- un- ec- un-

Onshore(LHS) Total(LHS) Offshore (RHS)

16% 16%

13%

8%7%

10%

5%

10%

15%

20%

Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10

Attrition

,

targeted salary increases forkey skills Offset by:

Increasing offshore Managing onshore mix Productivity

Larger skill pools makeredeployment easier

Gross recruitment of around3,000 in H1


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Where our strategy takes usWe continue to focus on the same priorities:

Increasing client and people satisfaction

Above market growth


Margin improvement towards double digits

Strong cash generation

Improved returns to shareholders


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Ensuring that the progress we havemade in improving the performanceof the business delivers a real returnto shareholders through our dividendpolicy, while continuing to providesufficient funds to invest in future

Improving returns to shareholders

(H1 2009: 1.0p)

Interim dividend1.9p


Announcing our intention to move thedividend payout ratio from 2009levels of 28% to at least 40% by2012

Interim dividend represents a third of H1 adjusted EPS


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What to expect for 2010

Net debt/EBITDA to be comfortably below 1.0x at year end

Growing order book with shift towards commercial sectors

Outsourcing will continue to grow


Consulting and professional services will continue to stabilise

The balance of our business underpins our expectation of fullyear group revenue and adjusted operating margin at a similarlevel to 2009 on a pro forma constant currency basis


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Q u e s t i o n s ?


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Where are we today ? Results at a glance

Adjusted operating margin

(H1 2009 revenue: 1,883m)

Revenue decline *

(1)% 6.7%

(H1 2009 pro forma: 6.8%)

Book to bill

114%

(H1 2009 pro forma: 112%)


(H1 2009: 5.5p)

Adjusted EPS

5.7p

(H1 2009: 1.0p)

Dividend

1.9p 25%(H1 2009: 73%)

Cash conversion

* On a pro forma basis


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Where are we now? Shape of group at a glance

Growth in FSand IDT

Public Sector,E&U andTelecomsdown againststrong comps

PS32%

E&U17%

T8%

FS15%

Sectors

Improving trendwith FS and IDTclients

Top 5040%(H10938%)

Clients


France22%

UK20%

Benelux14%

N and CEurope21%

H110 revenue1,871m

Improvingtrends in Franceand Northernand CentralEurope offsetby challengingmarket inBenelux

IDT

28%

Geographies

International8%

Outsourcing42%

(H10939%)

OutsourcinggrowthoffsettingConsulting

/ProfessionalServicesdecline

Services

Sweden15%


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H110 key metrics - Outsourcing Services

Revenue (m) split by activityBPO9% AM

51 %

42%Of Total Group Revenue

% of outsourcing revenue


792m+9% growth .Adjusted operating margin


IM40%


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Revenue diversification by geography

UK20%

2010 H1 Revenue

1,871mOther N and CEurope6%

Rest of World6%

OtherNordics6%

Iberia2%


France22%

Benelux14%

Sweden15%

Geographies Finland9%


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Quarterly revenue progression

900

950

1,000

Revenue (m) and pro forma year on year growth %

0% (4)%

(4)%

(4)%(2)% 0%


700

750

800

Q1 Q2 Q3 Q4

2008 2009 2010


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H110 revenue progression

1,875

1,900

1,925

1,876m

+10m (3)m1,883m

+6%

+5% (3)%

+1% (15)%

1,871m+1%


1,850

H110 YoY revenue (decline)/growth(1)% pro forma ; 0% actual


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FY09 pro forma revenue at current rates

Q1'09'm

Q2'09'm

H1'09'm

Q3'09'm

Q4'09'm

FY'09'm

France 195 186 381 174 196 751 Northern and Central 184 179 363 167 197 727 UK 182 197 379 193 178 750


ene ux

Sweden 139 138 277 119 142 538 International 78 83 161 81 90 332 Total 930 924 1,854 855 933 3,642


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Revenue diversification by market sector

Revenue by market sectorH1'10

'm

H1'09Pro forma

'm

H1'09Actual

'm

% GrowthH1'10 on

H2'09Pro forma

% GrowthH1'10 on

H1'09Pro forma

ShareH1'10

%Public Sector 590 602 608 4 (2) 32


,Energy and Utilities 320 332 324 (3) (4) 17Financial Services 290 280 283 9 4 15Telecoms and Media 142 154 155 (10) (8) 8Total at June 2010 average rates 1,871 1,883 1,876 3 (1) 100


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Q210 revenue progression

922m

938m 940m+17m (1)m

(2)%

920930940950960

970980

+10%

+9% (9)%+4% (16)%


900910


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Analysis by operating unit

H1'10'm

H1'09Pro

forma'm

%Changev H1'09

Proforma

H1'10'm

H1'09Pro

forma'm

H1'10%

H1'09Pro

forma%

H2'09Pro

forma%

FY'09Pro

forma%

Adjusted operating

profit MarginRevenue


. . . .Northern and Central 390 373 5 26 25 6.6 6.6 8.9 7.8UK 367 379 (3) 26 29 7.1 7.6 9.5 8.5Sweden 279 277 1 15 19 5.5 6.7 7.7 7.2Benelux 257 301 (15) 12 15 4.7 5.1 3.1 4.2International 163 162 1 12 13 7.2 8.3 10.1 9.2Total Group 1,871 1,883 (1) 125 127 6.7 6.8 8.0 7.4


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France

H1'10'm

H1'09Pro forma

'm

H1'09Actual

'm

% GrowthH1'10 on

H2'09Pro forma

% GrowthH1'10 on

H1'09Pro forma

ShareH1'10

%Industry, Distribution and Transport 160 145 143 1 10 39Financial Services 103 98 101 6 5 25Other sectors 152 148 157 23 3 36


Outsourcing % 42 37 37

Adjusted operating margin % 8.1 6.8 6.8

Book to Bill 116% 124%


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UK

H1'10'm

H1'09Pro forma'm

H1'09Actual'm

% Growth

H1'10 onH2'09

Pro forma

% Grow th

H1'10 onH1'09

Pro forma

ShareH1'10

%Public Sector 230 233 233 (2) (1) 63Energy & Utilities 58 55 55 18 5 16Other sectors 79 91 91 (10) (13) 21


Total 367 379 379 (1) (3) 100





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Northern and Central Europe

H1'10'm

H1'09Pro forma

'm

H1'09Actual

'm

% GrowthH1'10 on

H2'09Pro forma

% GrowthH1'10 on

H1'09Pro forma

ShareH1'10

%Industry, Distribution and Transport 142 133 135 12 7 36Public Sector 118 114 116 2 4 30Other sectors 130 126 127 (1) 3 34


Total 390 373 378 4 5 100





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Sweden

H1'10'm

H1'09Pro forma

'm

H1'09Actual

'm

% Growth

H1'10 onH2'09Pro forma

% Growth

H1'10 onH1'09Pro forma

ShareH1'10%

Industry, Distribution and Transport 123 125 116 18 (2) 44Public Sector 76 82 77 (3) (7) 27Other sectors 80 70 65 3 14 29






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150

200

Revenue (m) and pro forma revenue YoY growth (%)

Benelux

(24)%

(11)% 4.7%Adjusted operating margin(H109 pro forma: 5.1%)

(16)%(22)%

14%Of Total Group Revenue

(15)%

(15)%


0

50

100

Key points Continuing decline in structurally difficult

market Financial Services trend shift with clear

slowing down of decline from 18% to 1% Adjusted operating margin improvement

from 3.1% in H209 pro forma Utilisation at mid to high seventies Book to bill H110 107%; H109 87%


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Benelux

H1'10'm

H1'09Pro forma

'm

H1'09Actual

'm

% GrowthH1'10 on

H2'09Pro forma

% GrowthH1'10 on

H1'09Pro forma

ShareH1'10

%Public Sector 89 108 111 2 (18) 35Financial Services 73 74 76 9 (1) 28Industry, Distribution and Transport 47 57 58 - (18) 18Other sectors 48 62 64 (16) (23) 19


Total 257 301 309 - (15) 100





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International

H1'10'm

H1'09Pro forma

'm

H1'09Actual

'm

% GrowthH1'10 on

H2'09Pro forma

% GrowthH1'10 on

H1'09Pro forma

ShareH1'10

%Energy and Utilities 110 116 107 (11) (5) 67Industry, Distribution and Transport 14 11 10 (13) 27 9Financial Services 10 12 12 (17) (17) 6Other sectors 29 23 22 16 26 18


Total 163 162 151 (7) 1 100





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H110 adjusted operating profit progression

75

100

125

150

127m -- 127m-- +5m(7)m

125m


H110 6.5% 6.8% 6.7%

H109 pro forma 6.8% 6.4% 7.0%

Margin


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H110 adjusted operating profit progression

110

120

130

140

150

127m -- 127m(1)m

+8m +1m (3)m (4)m(3)m 125m--


100

H110 8.1% 6.6% 7.1% 5.5% 4.7% 7.2% 6.7%

H109 pro forma 6.8% 6.8% 6.6% 7.6% 6.7% 5.1% 8.3%

Margin


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Summary cash flow six months ended 30 June 2010

2010H1'10 H1'09 Guidance

'm 'm 'mAdjusted operating profit 125 127

De pre cia tio n a nd a mo rtis atio n of inta ngible s no t re co gnis ed on a cquis itio n 27 28 Movement in working capital (124) (63) Other non-cash movements 3 1

Net cash inflow from continuing operations 31 93 Cash conversion 25% 73% c.100%


Net debt/EBITDA of 1.1x at 30 June 2010

Cash outflow related to restructuring (PfG) (25) (31) c.(58)Net financing cost paid (6) (18) c.(17)Income tax paid (24) (26) c.(56)C ape x le ss dis pos als o f pro pe rty, pla nt & e quip me nt a nd inta ngible as se ts (30) (28) c.(63)Impact of acquisitions and disposals (9) (47) Dividends paid to shareholders (37) (9) Exchange differences and other 8 47

Opening net debt (291) (438)

Closing net debt (383) (457)


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Income statement (1 of 2) six months ended 30 June2010

H1'10'm

Proforma

H1'09'm

Actual

H1'09'm

Proforma

Variance%

Revenue 1,871 1,883 1,876 (1)

Adjusted operating profit 125 127 127 (2)


. . .

Amortis ation of inta ngible s re cognis ed on bus ine ss combina tions (32) (44)

Exceptional items - (44)

Statutory operating profit 93 39

Net finance costs (7) (15)

Profit before tax 86 24


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Income statement (2 of 2) six months ended 30 June2010

H1'10'm

ActualH1'09'm

Profit before tax 86 24

Taxation (18) (3)


Net profit after minority interests 68 21

Basic adjusted EPS from continuing operations (p/share) 5.7 5.5

Half Year Dividend (declared - pence) 1.9 1.0


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Income statement six months ended 30 June 2010

H1'10'm

ActualH1'09

'm

Adjusted operating profit 125 127

Amortisa tion of inta n ible s re co nise d on bus ines s combina tions 32 44


Programme for Growth costs - (44)

Statutory operating profit 93 39


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Calculating the tax charge

Total beforeexceptionals and

amortisation ofintangibles

'm

H1'10 amortisation ofintangible asse ts

initially recognised onacquisition

'mTotal

'mOperating profit 125 (32) 93


Net financing costs (7) - (7)

Profit before tax 118 (32) 86 Tax (charge)/credit (27) 9 (18)

Effective tax rate 23%

Forecast rate on ordinary activities going forward is c23%


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Numbers of shares used for EPS

Weighted averageNo. of shares

(millions)H1'10

Weighted averageNo. of shares

(millions)FY'09


, ,

Less: shares held by ESOP trust (12) (13) Shares for EPS purposes 1,589 1,586


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Logica is a business and technology service company, providing business consulting, outsourcing, systems integration, and professional services.Its value for clients lies in successfully integrating people, business and technology and delivering in a cost-effective manner. It is committed to long termcollaboration, applying insight to create innovative answers to clients business needs. Logicas 39,000 people work with clients around the world, includingmany of Europes largest businesses. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). Moreinformation is available at www.logica.com

Documents

Results for the Six Months Ended 30 June 2010